Manufacturing growth hits a 10-month high

A surprise March boost for Britain's manufacturers fuelled hopes of averting a double-dip recession yesterday, but the malaise over the eurozone's industrial sector is worse than feared, according to industry surveys.

The latest snapshot of Britain's industrial prowess showed growth among manufacturers picking up to a 10-month high, as well as faster expansion in February than first thought, the latest Markit/Chartered Institute of Purchasing & Supply activity index showed.

But the UK picture contrasted starkly with a worsening downturn in Europe, which is sliding into a renewed recession. France, the second-biggest economy in the single-currency bloc, was worst affected in a miserable month for the eurozone as new orders slumped. The region's economic powerhouse, Germany, also saw a worrying slide in export orders.

UK firms are suffering from one of the biggest spikes in costs for nearly 20 years as crude oil soars above $120 a barrel, but the Cips survey, where a score over 50 signals growth, accelerated to 52.1 during the month. Manufacturers are chasing orders in Africa, Japan and South-east Asia to make up for tougher conditions in Europe, the UK's biggest market.

Despite a warning from the OECD economic think-tank last week over a technical double-dip in the UK, two quarters of contraction, experts said the economy was likely to expand by 0.2 per cent or 0.3 per cent.

Royal Bank of Scotland economist Ross Walker said: "The manufacturing sector alone is not large enough to drive UK economic recovery, but the survey evidence suggests output in the sector will expand at above-trend rates in [the first quarter]."

At Investec, Philip Shaw described it as "a decent result" after expectations of a fall. "It's certainly our view that the economy as a whole expanded again in the first three months of 2012, unlike last week's OECD forecast," he added.